German steel industry is suffering

German steel industry is suffering

Steel industry in Germany had not spent a happy month in April at all. According to market reports sales of flat rolled products in the market has dropped even further and sharply. The new project investments and the market demand has been going down continuously. The steel processors in the market, purchase material only when they have an order in hand, and do not want to risk increasing their stocks. Consequently the sales of stockholders are down and financial pressure is increasing. Analysts do not predict much better times to come for the rest of the year. Economical situation is not bright and apparently worsening according to reports. The German government had already revised its GDP growth expectation for the year as minus 0.75% by the end of April. Therefore lower demand from automotive and construction industries are predicted. Particularly the construction industry has been performing very poorly in Germany for a long time now. Flat rolled steel producers are still trying to keep the prices stable by keeping the supply at a limited level. However, European market has already become prone to imports, as international market prices collapsed incredibly for flat products since March. Chinese and/or other Asian markets are not expected to recover anytime before late third quarter. The US market is no different, and thus, along with the strength of Euro, the international suppliers are very much encouraged to get into European markets. That has already started to put an inevitable pressure on the local mills in Germany as well, particularly on the hot rolled front. The goal of local mills for third quarter will be to keep the prices as stable as possible. Number of import contracts are increasing everyday and therefore almost all buyers tend to buy only when they need material as all believe prices will go down further. There is also no possibility of exports to help the local mills, as prices are far from being acceptable in international markets.